Whether you have a large corporation or a one-person operation, business taxes are something that you’ll need to think about one day.
If you locate your business in an area with a tax-friendly climate, you can increase profit margins while reducing overall liabilities.
Although a business in any climate can be successful, you’ll want to consider the best and worst states for taxes if you’re thinking about starting something soon.
What Are the Best States for Business Taxes?
If you want to start a business today, one of the best states is Wyoming. There isn’t a corporate or an individual tax there, and only South Dakota can claim a similar structure. Nevada is another option to consider, although it imposes a gross receipts tax.
Washington doesn’t have an individual income tax, which makes it an attractive option for small businesses. Although every company, including sole proprietors, must have a license to operate, you must make a decent amount of money before the credits outweigh the business and occupation taxes you’d pay.
That means you could earn $50,000 as a freelancer in Washington while only paying federal taxes and the fees for your licenses.
What Are the Worst States for Business Taxes?
New Jersey is often ranked near or at the bottom as the worst state for business taxes. It’s hampered by the higher property taxes that get charged, along with an aggressive treatment of multinational income. It even levies an inheritance tax.
Other states that push the tax liabilities higher for businesses of all sizes are California, New York, Connecticut, Minnesota, and Arkansas.
Some notable changes have happened in states like Florida, Iowa, and Indiana, where rate reductions are occurring, making them a potential option if one of the best states isn’t an option for your needs.